16-01-2015

Swiss National Bank ends euro peg in surprise move

The Swiss National Bank (SNB) on Thursday unexpectedly scrapped a three-year-old cap on the franc. In turn, the currency soared through the 1.20 per euro limit while stock-markets were crashing. “The exit needed to come suddenly,” SNB head Thomas Jordan defended himself. cep expert Bert Van Roosebeke sees the SNB decision linked to Wednesday’s approval of the ECB’s OMT bond purchasing program by the advocate general of the European Court of Justice. “It looks like from a political viewpoint there’s now nothing standing in the way of massive government bond purchases by the ECB anymore,” Van Roosebeke said. “This would further weaken the euro and strengthen the franc. In order to defend the cap of 1.20 franc, a lot of Swiss central bank money would have been needed.”